CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (“GEM”) OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “EXCHANGE”) GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies list on GEM with neither track record of profitability nor any obligation forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to highmarket volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM. The principal means of information dissemination on GEM is publication on the internet website operated by the Exchange. Listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website in order to obtain up-to-date information on GEM-listed issuers. Contents Corporate Information 2 Corporate Structure 3 Operation and Financial Summary 4 Chairman’s Statement 5 Distribution of Major Operation Gas Stations 10 Business Review 13 Directors, Senior Management and Staff 24 Report of the Directors 27 Report of the Auditors 38 Consolidated Profit and Loss Account 39 Consolidated Statement of Recognised Gains and Losses 40 Consolidated Balance Sheet 41 Consolidated Cash Flow Statement 42 Balance Sheet 43 Notes to Financial Statements 44 Notice of Annual General Meeting 65 Corporate Information EXECUTIVE DIRECTORS HONG KONG BRANCH SHARE REGISTRAR AND Shum Ka Sang, Chairman and Chief Executive Officer TRANSFER OFFICE Wang Guanghao, Honorary Chairman HKSCC Registrars Limited Choi Yat Choy 2nd Floor, Vicwood Plaza Shen Yi 199 Des Voeux Road Central Chen Cuiwan Hong Kong INDEPENDENT NON-EXECUTIVE DIRECTORS STOCK EXCHANGE LISTING Cui Shuming The Growth Enterprise Market of The Stock Exchange of Ji Xiaowei Hong Kong Limited COMPLIANCE OFFICER STOCK CODE Shum Ka Sang 8035 QUALIFIED ACCOUNTANT SPONSOR Kwong Sze Tu, Paul, ACCA, AHKSA Oriental Patron Asia Limited GEM – Registration Sponsor COMPANY SECRETARY 42nd Floor, COSCO Tower Kwong Sze Tu, Paul, ACCA, AHKSA 183 Queen’s Road Central Hong Kong AUTHORISED REPRESENTATIVES Shum Ka Sang AUDITORS Ernst & Young Choi Yat Choy Certified Public Accountants 15th Floor, Hutchison House MEMBERS OF THE AUDIT COMMITTEE 10 Harcourt Road Cui Shuming Central Ji Xiaowei Hong Kong Chen Cuiwan SOLICITORS REGISTERED OFFICE Woo, Kwan, Lee & Lo Clarendon House 27th Floor, Jardine House 2 Church Street 1 Connaught Place Hamilton HM 11 Central Bermuda Hong Kong HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS PRINCIPAL BANKERS Unit 1904, 19th Floor CITIC Ka Wah Bank Limited Causeway Bay Plaza II The Ka Wah Bank Centre 483 Lockhart Road 232 Des Voeux Road Central Causeway Bay Hong Kong Hong Kong Bank of China WEBSITE 395 Hennessy Road www.wahsanggas.com.hk Hong Kong BERMUDA PRINCIPAL SHARE REGISTRAR AND Standard Chartered Bank TRANSFER OFFICE 4-4A Des Voeux Road Butterfield Corporate Services Limited Central Rosebank Centre Hong Kong 11 Bermudiana Road Pembroke, Bermuda The Agricultural Bank of China No. 61 Beijing Road Nankai District Tianjin PRC 2 Wah Sang Gas Holdings Limited Annual Report 2000 Corporate Structure Wah Sang Gas Holdings Ltd (Incorporated in Bermuda) 100% Winstar Venture (Incorporated in BVI) 100% Wah Sang Gas Investment Group Ltd (Incorporated in Hong Kong) 90% 90% 100% Tianjin Wah Sang* Hengshui Wah Sang* Xintai Wah Sang* Wah Sang Equipment# (Established in the PRC) (Established in the PRC) (Established in the PRC) (Incorporated in BVI) 75% Binzhou Wah Sang* Sanhe Yansang* Zibo Wah Sang* Dezhou Wah Sang* (Established in the PRC) (Established in the PRC) (Established in the PRC) (Established in the PRC) Notes * formed to sell gas fuel, contract pipeline network construction and sell LPG equipment and appliances. # formed to act as the sourcing arm of the Group for LPG equipment. Annual Report 2000 Wah Sang Gas Holdings Limited 3 Operation and Financial Summary OPERATION FIGURES Mega-joules Metres Units 1,200 60,000 60,000 1,000 50,000 50,000 NSTALLED 800 IPELINE 40,000 40,000 I P 600 OF 30,000 30,000 ETERS ONSUMPTION M C 400 6 6 20,000 20,000 OF AS ENGTH . L G 200 10,000 O 10,000 N 7,136 28,208 20,000 55,000 479.24x10 0 969.27x10 0 0 1999 2000 1999 2000 1999 2000 SALES BREAKDOWN Wholesale and Retail 49.1% Construction of 60.3% 32.89% Pipeline Network 40.8% 6.8% 1.9% Provision of Piped Gas 3.3% 5% Others 1999 2000 FINANCIAL FIGURES HK$’000 HK$’000 60,000 120,000 TO 50,000 100,000 40,000 TTRIBUTABLE 30,000 URNOVER T 40,000 , A HAREHOLDERS S 20,000 ROFIT 20,000 P 10,000 36,401 104,091 25,033 1,948 0 0 1999 2000 1999 2000 4 Wah Sang Gas Holdings Limited Annual Report 2000 Chairman’s Statement On behalf of the Board of Directors, I am pleased to present the annual report of Wah Sang Gas Holdings Limited (the “Group”) for the year ended 31st March, 2000. RESULTS For the year ended at 31st March, 2000, the Group recorded a consolidated turnover of HK$104,091,000 (1999: HK$36,401,000) and consolidated net profit attributable to shareholders of HK$25,033,000 (1999: HK$1,948,000), representing a growth of 1.9 times and 11.9 times respectively. DIVIDEND As stated in the prospectus, the Directors of the Group do not recommend payment of final dividend and the retained profit will be used for future operation and development of the Group’s business. LISTING ON THE GROWTH ENTERPRISE MARKET (THE “GEM”) With strong support from the shareholders, the Group successfully listed on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited on 16th March, 2000 and became the only gas enterprise listed on GEM. The Group’s initial public offering achieved 12 times subscription and recorded a closing price of HK$6.35 per share on the first day of trading, posting an increase of more than 3.8 times over the offering price of HK$1.3 per share. I am very delighted at the successful listing of the Group’s shares on the GEM. In addition, it was very encouraging that the shares performed actively and the share price increase on the first day of dealing was among the best performer on GEM. I am confident of the prospects of the Group and will devote great efforts in strengthening the Group’s business for further growth. The Group will also consolidate its position as the leading supplier of piped gas in towns, small cities and suburban areas of larger cities in the PRC. Annual Report 2000 Wah Sang Gas Holdings Limited 5 Chairman’s Statement SIGNIFICANT GROWTH IN 2000 I would like to take this opportunity to give a brief summary of the Group’s major developments for year ended 31st March 2000. Connection Fees The Group receives one-off connection fees from property developers or property management companies in respect of connecting the users to the Group’s piped gas networks. The Group recorded a sustainable growth in its connection fee revenues from Tianjin City, Hebei Province and Shandong Province. Zibo City and Dezhou City of Shandong Province also commenced to generate connection fee revenues in 2000. For the year ended 31st March, 2000, the Group has installed meters for approximately 28,208 households, an increase of 3.0 times over 1999. Piped Gas The Group operates piped gas networks to deliver its liquefied petroleum gas (“LPG”) and mixed gas to end-users. The Group supplies piped gas through its 24 gas stations in Tianjin City, Hebei Province and Shandong Province. The total length of main pipelines amounts to approximately 55 kilometers, representing an increase of 1.8 times over 1999. Users’ consumption of piped gas in 2000 increased by approximately 1.8 times over the previous year to 63.01x106 mega-joules. In 2000, the Group successfully expanded into five new markets for its piped gas, namely Qihe County of Shandong Province, Xintai City, Jiyang County, Binzhou City and Zhouzhou City of Hebei Province. Accordingly, the designed user capacity reached approximately 400,000 households, posting an increase of 160,000 households over 1999. LPG Retailing and Wholesaling In anticipation of rapidly increasing demand for gas refueling in rural area around cities, four gas stations are equipped with gas refueling facilities for the provision of the Group’s wholesaling and retailing services of LPG. Currently, the wholesaling and retailing services are mainly provided in two forms, namely: • directly delivered to the places designated by wholesale customers by using gas tank trucks, which will then be filled into the customers gas storage facilities; and • sold in bottled form and are refueled at the Group’s designated gas refueling stations. The LPG retailing and wholesaling businesses rose by an encouraging 98.5% from 456.61x106 mega-joules in 1999 to 906.26x106 mega-joules in the current year. 6 Wah Sang Gas Holdings Limited Annual Report 2000 Chairman’s Statement FINANCIAL POSITION As at 31st March, 2000, the total assets and total liability of the Group amounted to HK$161,515,000 and HK$64,895,000 respectively.